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The Medicaid shuffle

March 14, 2011 at 11:30 am

Aaron Carroll

I’ve gotten a number of emails about Avik Roy’s post on Internists rejecting patients with Medicaid. Here’s the meat:

The Health Tracking Study Physician Survey, sponsored by the Center for Studying Health System Change, polled more than 4,700 physicians around the country in 2008. Among the questions the surveyors asked was: “Do you accept all, most, some, or no new Medicaid patients?” It asked the same question about patients with Medicare and those with private insurance.

I put together this chart, representing the percentage of physicians who accept no new patients, segregated by specialty and insurance type. The numbers speak for themselves. Medicaid beneficiaries have a far more difficult time finding a doctor than do those with Medicare or private insurance (click to enlarge):

Let’s start with the concession that Medicaid reimburses too little. OK? Do we have that out of the way? Since we all agree, it would be nice if we could focus on improving that, and get Medicaid to reimburse more. But that, of course, would require us to actually spend more on Medicaid, not less, and the people who are usually upset about the reimbursement are also upset about spending anything on Medicaid at all. The reason that we can’t reimburse enough is that we are underspending on Medicaid. Medicaid is cheap, as I’ve discussed before.

So, for instance, if 40% of pediatricians were refusing Medicaid patients, I’d be more concerned. If 40% of ObGyns were refusing Medicaid patients, I’d be more concerned. But 40% of internists refusing Medicaid patients in 2009? I wish it weren’t so, but I’m not as concerned.

For instance, I could have taken this chart and trumpeted that ZERO pediatricians were refusing patients with Medicare, and posted on how that signaled that private insurance is worse and horrible and should be shut down. I imagine a number of you would have pointed out to me that pediatricians aren’t the most significant group of providers for the Medicare population.

Moreover, this is how it works. I work in an academic medical center in a county hospital system. We see almost all Medicaid and uninsured pateints. That’s what we do; I don’t complain about it. My kids’ doctor is in the suburbs, near our house, and – I’m willing to wager – sees far less Medicaid. If she does, that’s her choice.

If you think that’s a problem, if you’re really concerned about how difficult it is for patients on Medicaid to find a doctor, then let’s figure out how to increase Medicaid reimbursement in order to make accepting those patients more attractive to private practice physicians.* I look forward to that conversation.

*The PPACA does this. I have yet to see anyone who thinks Medicaid reimbursement is too low support that.

UPDATE: I made a logical error on the chart with respect to pediatricians, and corrected it. My point is the same, though – pediatricians don’t really matter for the Medicare population.

PPACA only increases Medicaid reimbursement for 2 years, after which it reverts back to the lower levels. The reason they did this is because it was expensive to extend it further. But what it means is that either the coverage expansion fairly quickly becomes meaningless as docs start refusing Medicaid patients again, or I what find more likely, we have a new “doc fix” situation on our hands.

There is not an inconsistency in believing that Medicare reimburses too low for many patients, and that overall Medicare spending is too high. Some portion of that under-reimbursement is passed on to privately insured people, which somewhat makes up for the low reimbursements but makes expansion of Medicare (via paying for more types of care or demographic trends) a source of ever-increasing costs for private insurance. Other providers perform more unnecessary services to make up for low reimbursement. There’s also the fact that roughly 10% of Medicare charges are fraudulent. And Medicare does not pay too little across the board, there are some areas where it can be pretty lucrative, but this distorts provider incentives both in providing care and choosing which field of medicine to practice.

Are some of the people saying Medicare doesn’t pay enough and Medicare spending is too high disingenuous and/or intellectually dishonest. Sure. But that’s not because the two things are inherently contradictory.

“Some portion of that under-reimbursement is passed on to privately insured people”

Austin has been addressing the cost shifting argument. There is not much of it going on.

“There’s also the fact that roughly 10% of Medicare charges are fraudulent.”

It costs a lot more to bill for privately insured patients. The rate of fraud is hard to tell with private insurers. Trying to eliminate fraud entirely may have the unintended consequence of raising billing costs for providers enough to lose most of the gain.

Since the implied deduction is that Medicaid is worse than no insurance at all, it seems to me that we are missing a vital piece of data: what percentage of those specialty groups refuse to cover an uninsured patient?

Now that I have asked the question, the answer appears to have implications far beyond the Medicaid red herring.

You wonder if a private insurance company might find it cheaper to just pay claims and not worry about fraud.

I used to work for a life insurance company DoDahLife (all names changed to protect the commenter). It was owned by a large company (DoDahLoans) who made many small loans. They bought us to have a captive carrier for credit insurance (life and disability) on those loans.

We had a very small customer service department. If the claim form was anything close to being completed correctly we paid the claim. The reason was as you suspect: it was cheaper to just pay the claim.

“Austin has been addressing the cost shifting argument. There is not much of it going on”

According to Austin the most credible study showed a 21% cost shift. You’ll notice I didn’t say there is complete cost shift, But 21% is still a non-trivial amount to pass along to the privately insured.

“It costs a lot more to bill for privately insured patients. The rate of fraud is hard to tell with private insurers. Trying to eliminate fraud entirely may have the unintended consequence of raising billing costs for providers enough to lose most of the gain.”

You don’t have to limit it entirely, and it would be silly to try. But the type of fraud that happens in Medicare is basically nonexistent in private plans. More stringent billing requirements are a part of that. So are some of the administrative costs that are typically mentioned as a problematic part of private insurance.

This isn’t the most urgent problem to solve for Medicare, and neither is the hospital cost shift. But they are each contributors that people overlook or inappropriately dismiss when comparing private vs public insurance in the US.

Phil in Brighton, you’re asking the right question. We need to see the results for uninsured patients. For Medicaid to be the cause of poor outcomes, you’d have to believe we could do better for those patients spending only what we do now through some other delivery system. If we gave each Medicaid beneficiary a subsidy for private insurance equal to the average Medicaid spending, what could they buy? How many would be uninsurable? How many would make bad decisions about the type of coverage to buy?